LONDON MARKET; Retailers flounder as competition heats up
Sunday 21 November 1999
Engineering company Invensys and home builder Berkeley may advance amid optimism that Britain's economic growth will bolster earnings.
Sainsbury's, the UK's second-largest retail chain, is expected to say on Tuesday that first-half earnings per share fell 30 per cent while rival Safeway could report an 18 per cent drop in earnings. "It's extremely competitive in the high street," said Robert Talbut, head of global equities at Royal & Sun Alliance. "The earnings figures are not going to look very clever and the outlook statements will be extremely cautious. It's not a very interesting sector for us to invest in."
Mr Talbut said both food and clothing retailers are suffering from "huge excess capacity" in shop space, price sensitivity among consumers, and the effect of the internet, which is undermining traditional pricing strategies. Somerfield, Tesco and Iceland may slip. Marks & Spencer, Great Universal Stores and Boots may also drop. Arcadia, the UK's second-largest clothing retailer, warned on Thursday that first-half profit may fall short of expectations. Storehouse said it will split in two after discounting and sliding sales brought a first-half loss. These reports prompted Credit Suisse First Boston and HSBC analysts to downgrade their profit estimates for all leading clothing retailers.
"The UK clothing market is suffering an unprecedented level of price deflation, combined with a very demanding consumer," said HSBC. "Recovery is not coming through, and forecasts can't be believed."
UK third-quarter GDP, to be released on Tuesday, is expected to rise 1.9 per cent year on year, up from a 1.4 per cent gain in the second quarter. The outlook for accelerating growth may boost construction and manufacturing.
The FT-SE 100 index fell 0.5 per cent last week. Vodafone AirTouch led declines after its 133bn euro offer for Mannesmann, raising concern the company may be paying too much and diluting its earnings.
- 1 Moscow voted the world's unfriendliest city
- 2 The excuses your boss is most likely to believe when you call in sick
- 3 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 4 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
- 5 If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Senior British politicians tell David Cameron: When dead children are being washed up on beaches, it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...